It is important to remember that PMI underwrites to tighter guidelines than does Fannie Mae. PMI companies are stricter with debt ratios in most cases.
Therefore, for Conventional Borrowers putting down less than 20%, just getting an “Automated Approval” from Fannie Mae is often not enough to guarantee a complete approval. Borrowers need to make sure they have PMI available too.
Example: We have a buyer (with a 10% down payment) right now with a 51% back-end debt ratio. Fannie Mae has no problem with this buyer, and readily gives us a clean approval. PMI, however, will not touch this deal b/c their debt ratio ceiling is 45% for this borrower.
Call Jay Voorhees at (925) 855-4491
Real Estate Broker, CA Bureau of Real Estate, BRE# 01524255, NMLS# 335646